Reassessment-based penalty under Income-tax law can proceed where concealment is found after a fresh assessment replaces the original one.

Penalty under section 271(1)(c) may be initiated on the basis of a fresh reassessment where the original assessment has been set aside and a new assessment directed. Earlier penalty proceedings dropped after the original assessment was annulled do not bar later action if concealment of income is ultimately found in the reassessment. The section was treated as wide enough to cover penalty proceedings arising from reassessment or remand-based assessments, so the later penalty initiation was held to be within jurisdiction.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act could validly be levied in reassessment proceedings after earlier penalty proceedings had been dropped pursuant to the order setting aside the original assessment.

Analysis: The assessment originally made was set aside and a fresh assessment was directed. The earlier penalty proceedings, which had been initiated on the basis of the original assessment, were dropped in view of that appellate order. On the fresh assessment, and after the Tribunal found concealment of income, the initiation of penalty proceedings on the basis of the reassessment was held to be within jurisdiction. The scope of section 271(1) was treated as wide enough to cover penalty proceedings arising from reassessment or remand-based proceedings.

Conclusion: Penalty under section 271(1)(c) could be levied in reassessment proceedings; the answer was in the affirmative, against the assessee and in favour of the Revenue.

Ratio Decidendi: Where an original assessment is set aside and a fresh assessment is made, penalty proceedings may validly be initiated on the basis of the reassessment if concealment is ultimately found, and the earlier dropping of penalty proceedings does not bar such action.

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